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INCOME TAX ASSESSMENT ACT 1997 - SECT 104.47

Conservation covenants: CGT event D4

             (1)  CGT event D4 happens if you enter into a * conservation covenant over land you own.

             (2)  The time of the event is when you enter into the covenant.

             (3)  You make a * capital gain if the * capital proceeds from entering into the covenant are more than that part of the * cost base of the land that is apportioned to the covenant. You make a * capital loss if those capital proceeds are less than the part of the * reduced cost base of the land that is apportioned to the covenant.

Note:          The capital proceeds from entering into the covenant are modified if you do not receive anything for entering into the covenant: see section 116- 105.

             (4)  The part of the * cost base of the land that is apportioned to the covenant is worked out in this way:

The part of the * reduced cost base of the land that is apportioned to the covenant is worked out similarly.

             (5)  The * cost base and * reduced cost base of the land are reduced by the part of the cost base or reduced cost base of the land that is apportioned to the covenant.

Example:    Lisa receives $10,000 for entering into a conservation covenant that covers 15% of the land she owns. Lisa uses the following figures in calculating the cost base of the land that is apportioned to the covenant:

                   The cost base of the entire land is $200,000.

                   The market value of the entire land before entering into the covenant is $300,000, and its market value after entering into the covenant is $285,000.

                   Lisa calculates the cost base of the land that is apportioned to the covenant to be:

                   She reduces the cost base of the land by the part that is apportioned to the covenant:

Exceptions

             (6)  * CGT event D4 does not happen if:

                     (a)  you did not receive any * capital proceeds for entering into the covenant; and

                     (b)  you cannot deduct an amount under Division 31 for entering into the covenant.

Note:          In this case, CGT event D1 will apply.

             (7)  A * capital gain or * capital loss you make is disregarded if you * acquired the land before 20 September 1985.

Table of sections

104-55         Creating a trust over a CGT asset: CGT event E1

104-60         Transferring a CGT asset to a trust: CGT event E2

104-65         Converting a trust to a unit trust: CGT event E3

104-70         Capital payment for trust interest: CGT event E4

104-71         Adjustment of non-assessable part

104-72         Reducing your capital gain under CGT event E4 if you are a trustee

104-75         Beneficiary becoming entitled to a trust asset: CGT event E5

104-80         Disposal to beneficiary to end income right: CGT event E6

104-85         Disposal to beneficiary to end capital interest: CGT event E7

104-90         Disposal by beneficiary of capital interest: CGT event E8

104-95         Making a capital gain

104-100       Making a capital loss

104-105       Creating a trust over future property: CGT event E9

104-107A    AMIT--cost base reduction exceeds cost base: CGT event E10

104-107B    Annual cost base adjustment for member's unit or interest in AMIT

104-107C    AMIT cost base net amount

104-107D    AMIT cost base reduction amount

104-107E    AMIT cost base increase amount

104-107F    Receipt of money etc. increasing AMIT cost base reduction amount not to be treated as income

104-107G    Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset--adjustment of cost of asset

104-107H    Effect of AMIT cost base net amount on cost of AMIT membership interest or unit that is a revenue asset--amount included in assessable income



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